Fédération de Russie v. JSC Oschadbank

At a glance

Parties

Russian Federation v. JSC Oschadbank (formerly Public Joint Stock Company "State Savings Bank of Ukraine")

Case no.

Cour d'appel de Paris, Pôle 5 – Chambre 16, RG No. 19/04161

Court

Paris Court of Appeal, pre-trial judge (magistrat chargé de la mise en état), François Ancel

Underlying award(s)

PCA Case No. 2016-14, final award of 26 November 2018 (seat Paris)

Treaty

Russia–Ukraine BIT of 27 November 1998

Tribunal

David Williams (President), Charles Brower, Hugo Perezcano (arbitral tribunal of the underlying award)

Sector

Banking

Outcome

Russia's request to stay enforcement of the award pending its annulment action was rejected, and no adjustment of enforcement was ordered.

Amount

Award: USD 1,111,300,729 plus arbitration costs. Order: Russia to pay EUR 8,000 under Article 700 CPC, plus the costs of the incident.

The dispute

JSC Oschadbank, a bank owned by the Ukrainian State, ran a branch in Crimea. After Crimea joined the Russian Federation on 18 March 2014, the bank considered that its assets there had been expropriated. It began PCA arbitration under the Russia–Ukraine BIT. Russia did not take part. In a final award of 26 November 2018 the tribunal accepted jurisdiction, found an expropriation and ordered Russia to pay USD 1,111,300,729. Russia applied to the Paris Court of Appeal to annul the award. In this incident it asked the pre-trial judge to stay enforcement under Article 1526 of the Code of Civil Procedure. Its main argument was that enforcement in countries that do not adequately protect State immunity from execution, in particular Ukraine, would seriously harm its rights. Oschadbank asked the judge to reject the request or, in the alternative, to make any stay conditional on Russia depositing the award amount.

Key holdings

1. Under Article 1526 CPC, a stay or adjustment of enforcement cannot depend on how serious the annulment action is, and it must be assessed strictly. The judge looks in concreto at whether enforcement is likely to cause serious harm. That risk must be sufficiently established on the day of the decision, and a general, abstract or hypothetical ground is not enough. ¶¶ 38–39
2. The creditor's possible attempts to enforce in several countries, given the extent of Russia's assets, are no reason to stay enforcement. Russia showed no enforcement measure that had actually affected assets protected by its immunity. ¶ 41
3. The claim that some foreign laws protect State immunity from execution inadequately is not in itself a ground for a stay. Whether an enforcement measure is valid is for the court of the place of enforcement, under its own law. ¶ 42
4. Russia neither showed nor argued that enforcement would threaten its financial viability, judged on the scale of a State. No risk of non-restitution was established: Oschadbank is a State-owned bank with more than 29,000 employees, and there was no proof that it was in financial difficulty. ¶¶ 43–44
5. The request for a stay was rejected. Because Russia opposed it, and because it was not justified, no adjustment of enforcement (such as a deposit) was ordered. Russia must pay EUR 8,000 under Article 700 CPC and the costs of the incident. ¶¶ 45–47; operative part

Procedural history

1. 20 January 2016Oschadbank began PCA arbitration against Russia under the Russia–Ukraine BIT. Russia did not appear.
2. 26 November 2018Final award (PCA Case No. 2016-14): jurisdiction upheld, expropriation found, Russia ordered to pay USD 1,111,300,729.
3. 19 February 2019Russia filed an action to annul the award before the Paris Court of Appeal.
4. 25 March 2019Russia applied to the pre-trial judge for a stay of enforcement under Article 1526 CPC.
5. 17 July 2019According to Russia, the Kyiv Court of Appeal granted exequatur of the award.
6. 13 August 2019After Oschadbank entered an appearance late, the judge reopened the hearing.
7. 22 October 2019Order of the pre-trial judge rejecting the request for a stay.

Tribunal, counsel and experts

Decided by

• François Ancel Judge, Cour d'appel de Paris

For the claimant

Luca de Maria · Philippe Pinsolle · Thomas Voisin

For the respondent

SELARL Lexavoue Paris-Versailles · Foley Hoag LLP

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Keywords

• stay of enforcement
• Article 1526 Code of Civil Procedure
• annulment action
• Crimea
• expropriation
• Russia–Ukraine BIT
• State immunity from execution
• New York Convention Article V(1)(e)
• Oschadbank
• PCA
• Paris Court of Appeal
• serious harm
• risk of non-restitution
• banking
• sovereign assets

Summary generated with AI from the published documents — refer to the award for the authoritative text.